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I am thinking of selling some of my btl properties and have just spent the last 2 hours on the net trying to find a definitive list of CGT allowable deductions from the profit I may have made. I know I can deduct my annual CGT allowance but what others? Can anyone help please? Thanks

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  • 3 weeks later...

Hi Vodkawoman (like the tag by the way!)

Sorry for the delay in responding, I have not been on here for a while.

To introduce myself, my name is Sherena and a I am a Chartered Tax Adviser (ie. a tax accountant - not HMRC!) and Senior Tax Consultant.

The types of allowances available will depend on your circumstances, but since the last budget, the reliefs/allowances available have been reduced. You no longer get reliefs for holding the property over the longer term - Taper Relief and Indexation are now gone (in most circumstances, but in some cases people have 'banked indexation' by inter-spouse transfer or unbeknowingly on transfers in separation and divorce), but in simple terms they are no longer available.

If there is no Principal Private Residence Relief (PPR) use then it will only be your Annual Exemption available. If there is PPR use then you could have some of the gain exempt by PPR and also Lettings Relief. The figures would depend on your situation and these in themselves are potential planning areas with the right structures.

Make sure you claim any allowable expenses, for example costs of sale and purchase, improvements etc. Improvements is a grey area and so difficult to list, but this would be things like adding a porch, conservatory, major renovations etc.

There are ways to reduce your potential CGT by planning ahead and getting the right structure in place, for example if you are married, if you dont intend to sell in this tax year and therefore have a period in which to plan to reduce/defer/eliminate tax, depending on the individual. There are various options available depending on the individual circumstances and aspirations.

Another great way to reduce/defer/mitigate CGT is if you can temporarily re-invest the profits. For the right individuals the reinvestment route can produce an excellent return, for example, a profit of say £109,600 would after A/E ordinarily result in a CGT bill of £18k. However there are investments around that could turn this into a net £3800 tax refund after just three years, or even £20k refund and elimination of the CGT entirely if longer term investment of proceeds is an option. Therefore (and it would depend on the cicumstances) it can be possible to consider turning an 18% tax bill in to a huge return on investment - potentially better than any bank/alternative investment could give!

I am not allowed to talk specifically about the investments (I am a CTA not and IFA and therefore specifically forbidden by my institute about talking about these investment strategies in detail) but I work with IFA's who can discuss this. Some of these investments are higher risk but my IFA colleagues are involved in protected investments which can minimise risk exposure. This is an area that I work closely with my colleagues in so that between us we are able to advise clients on the tax advantage and the types of investments that can be made. This is not something that can be effectively achieved without professional guidance, but for any of you who are considering this potential, please do feel free to email me on sherena.glanton@target-accountants.com and I would be happy to discuss your position further to ascertain whether this is a viable option. People often shy away from this through lack of understanding or not wishing to pay professional fees, but sometimes it pays to get a bit of help.

Hope this helps.



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